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Protecting Brand Critical in Recession

During the recession, businesses especially appreciate the power of their brand and the need to protect it. However, according to research from intellectual proper, most brands are not quick to respond to the threats posed by trademark trespassing. In Mark & Clerk’s research, 84% of the executives surveyed claimed that a strong brand is more important in an economic downturn than in favorable economic circumstances, 86% also said that they are more inclined to defend existing products and services from competitive threats than before the recession. However, only 20% said that management was devoting more time than before to brand protection.

In addition, for many marketers, the brand protection role is unchartered territory according to The Protection From Brand Infection study of 306 marketers conducted by the Chief Marketing Officer (CMO) Council. The study revealed that 42% of companies have assigned the brand protection role to legal, finance or IT. Only 15% of marketers are both the brand champions and are responsible for their companies brand protection programs. Only 6% of companies surveyed have an official brand protection department.

The findings also included that 33% of the marketers surveyed don’t yet know the sales impact of knock-offs, gray market products or bogus brand cloning. However, 41.2% of respondents believe the value and integrity of their brand assets have suffered the greatest impact from counterfeit products, knock-offs or online brand hijacking, with 35% directly linking brand attacks to reductions in revenue and margins. Among those respondents who have estimated the financial toll on sales of brand intrusions, 39.6 percent say the cost is greater than 5 percent of sales, and 8.2 percent said it exceeded 20 percent of sales.

Sophisticated and savvy brand extortionists and cyber scammers on the Internet are boldly preying on unsuspecting consumers with bogus brand name email/web sites, deals and inducements that entrap, extort and expose consumers to financial loss, identity theft, and viral infection,” said Donovan Neale-May, the CMO Council’s executive director. “Marketers have awakened to not just the threat to bottom line business issues posed by trademark trespassing, but also the costs of lost brand value, integrity and consumer trust.”

Recommendations: More companies need to create multi-departmental brand protection teams to better understand and measure the size of the problem. The implications of brand hijacking are significant to sales, brand equity and customer loyalty.